Lowest FTB mortgage repayments in a decade

Sarah Davidson

June 16, 2015

First-time buyer loan sizes have increased since a year ago, though their income has grown faster in proportion relative to loan sizes which has meant a fall in the typical loan-to-income ratio. Loan-to-value ratios have also fallen compared to a year ago.

Despite this, the number of loans for house purchase remained steady in April compared to March but was down compared to a year ago, Council of Mortgage Lenders figures show.

As previously reported gross lending in April was £15.8bn, down from £16.1bn in March and £16.8bn in April last year.

On an annual basis there was a fall across both first-time buyer numbers and home movers. On a monthly basis the number of first-time buyers fell but the number of home-movers rose slightly.

Growth rate shows activity across first-time buyers, home movers and remortgage was down compared to April last year. The 12-month rolling sum of the number of first-time buyers has been above 300,000 since June 2014, though it has been gradually falling since October.

The average home mover loan size decreased in April compared to March, but increased compared to the same period last year. Average income increased in April, meaning loan-to-income decreased both month-on-month and year-on-year.

Remortgage activity among home-owners was down on the month and on the year. It has remained relatively subdued since around 2009.

Lending for buy-to-let in April saw a decline compared to March but there was substantial growth compared to levels in April last year. This was largely due to the increased levels of remortgage activity in the buy-to-let sector seen since the beginning of the year.

While over the past year about 30% of lending to home-owners was for remortgage, in the buy-to-let market 52% of lending was for remortgage.

Paul Smee, director general of the CML, said: “House purchase lending in April was relatively subdued compared to last year, but similar to activity in March. The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses.

“Buy-to-let is showing stronger growth than home-owner lending, buoyed significantly by remortgaging, which continues to remain more subdued in the home-owner market.”

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